Survey indicator suggests market has settled


Balancing act from Dave Rogers – who says market is normalised in terms of difference between selling and asking prices.

Clear evidence that the property market has settled and is set for an upturn is the fact that the difference between asking and selling prices has dropped back to normal levels of between 5 and 10 percent in most areas - from as much as 25 to 30 percent in the middle of last year.

This has emerged from the latest national survey conducted by the Homenet group through its network of more than 160 branches countrywide, and is good news for homebuyers.

"More moderate pricing," notes Homenet MD David Rogers, "obviously means greater affordability - but also less debt, which should please Reserve Bank
Governor Tito Mboweni."

However, the lowering of the asking/selling price differential is also positive for home sellers, he says, as it also suggests an upturn in buyer interest and thus in sales activity.

The Homenet poll was conducted in response to a statement in a recent FNB
Property Barometer that more than 80 percent of sales taking place were for less than the asking price, and high-profile media reports that asking prices were frequently having to be discounted by as much as 50 percent in order to achieve a sale.

"Our idea," Rogers says, "was to establish more accurately the current extent of the asking/selling price difference - which is of course always present, even in a boom market - and to see whether it had changed since interest rates began to rise in July last year.

"And our research revealed, quite simply, that the average difference, which shot up from almost zero at the height of the boom to as much as 30 percent last year, had fallen back to between 10 to 15 percent at the end of last year and has now dropped again to between 5 and 10 percent in most areas.

"What this means, essentially, is that buyer and seller expectations are now much more in harmony than they were six months ago - and that always spells a steady stream of sales, with the opposite being true when expectations are out of synch.".

Indeed the survey also strongly underlined the correlation between overpricing and slow sales, which Homenet principals around the country identifying their slowest moving areas as those where sellers are "holding out" for what they want and the average asking/ selling price difference is highest.

These areas include Musgrave and central Westville in Durban. Among the fastest selling areas identified by the Homenet offices included Morningside and Dawncliffe in Durban, which all currently show an average asking/ selling price difference of five percent or less.

Article by: Rodney Hayter - www.rodneyhayter.com